By letter dated July 8, 2003, you requested
that the U.S. Nuclear Regulatory Commission (NRC) exercise discretion
not to enforce compliance with certain requirements of Technical Specification
(TS) 3.6.6, "Containment Cooling Systems," for the inoperable Containment
Air Cooler Recirculation Fan V-4A. Your letter documented information
previously discussed with the NRC in a telephone conference which occurred
on July 3, 2003, at 11:00 a.m. (all times discussed in this letter refer
to Eastern Daylight Savings Time). You stated that on July 4, 2003,
at 4:14 a.m., Palisades would not be in compliance with TS 3.6.6, Condition A,
which would require the unit to be placed in Mode 3 (Hot Standby) by 10:14
a.m. on July 4, 2003. You requested that a Notice of Enforcement Discretion
(NOED) be issued pursuant to the NRC's policy regarding exercise of discretion
for an operating facility, set forth in Section VII.C, of the "General
Statement of Policy and Procedures for NRC Enforcement Actions" (Enforcement
Policy), NUREG-1600, and be effective for a period of 100 hours from 4:14
a.m. on July 4, 2003, to 8:14 a.m. on July 8, 2003. This letter documents
our telephone conversation on July 3, 2003, when we orally issued
this NOED at 1:37 p.m. At the time of the telephone conference, Palisades
was operating in Mode 1 (Power Operation) at 88 percent power and stable.

We understand that the condition causing
the need for this NOED was corrected. Consequently, you exited from TS
3.6.6, Condition A, and from this NOED on July 6, 2003, at 2:04 p.m.

On July 1, 2003, the supply breaker for
the Containment Air Cooler Recirculation Fan V-4A motor tripped on thermal
overload. Subsequently, Containment Air Cooler Recirculation Fan V-4A
was visually inspected for damage.
During this inspection, the fan motor shaft was determined to be bent
and the fan housing supports damaged. Containment Air Cooler Recirculation
Fan V-4A was declared inoperable when the fan supply breaker tripped at
4:14 a.m. on July 1, 2003, and TS 3.6.6, Condition A, was entered.

Following the identification of damage to
Containment Air Cooler Recirculation Fan V-4A, actions were initiated
to effect repairs. These actions consisted of the replacement of the Containment
Air Cooler Recirculation Fan V-4A assembly (fan and motor) with a replacement
assembly and repair of the fan housing supports.

Technical Specification Limiting Condition
for Operation 3.6.6, "Containment Cooling Systems," states that "Two containment
cooling trains shall be operable." This specification is applicable in
Modes 1, 2, and 3. Technical Specification 3.6.6, Condition A, provides
required actions for one or more containment cooling trains inoperable.
If one containment cooling train is inoperable under Condition A, action
is required to restore the containment cooling train to an operable status
within 72 hours. Technical Specification 3.6.6, Condition B, requires
the unit to be placed in Mode 3 (Hot Standby) within the next 6 hours
and Mode 4 (Hot Shutdown) within the next 30 hours if Condition A is not
met.

Your staff requested enforcement discretion
to preclude a required entry into Mode 3 (Hot Standby) by 10:14 a.m. on
July 4, 2003. To accomplish this, you requested that the 72-hour allowed
action time for TS 3.6.6, Condition A, be extended by 100 hours to 8:14
a.m. On July 8, 2003, to accomplish restoration of Containment Air Cooler
Recirculation Fan V-4A to an operable status. With this extended allowed
action time, the unit would have been required by TS 3.6.6 to enter Mode
3 (Hot Standby) by 10:14 a.m. on July 4, 2003, if Containment Air Cooler
Recirculation Fan V-4A remained inoperable.

At the time that enforcement discretion
was requested, the root cause of this problem had not been definitively
identified, however, you stated that a review of maintenance and operating
history and evaluation of vibration data suggested an apparent cause of
bearing failure in the Containment Air Cooler Recirculation Fan V-4A motor.
The other three Containment Air Cooler Recirculation Fans were visually
inspected and no similar problems were identified.

Your staff requested this NOED after consideration
of the safety significance and potential consequences of such an action.
Your staff determined that there was no net increase in risk by allowing
the plant to operate an additional 100 hours to restore Containment Air
Cooler Recirculation Fan V-4A to an operable status and that this action
did not result in an undue risk to the health and safety of the public.
The evaluation was performed using the Palisades probabilistic risk assessment
model that accounts for the current plant configuration and includes the
assumption that the Containment Spray system including Containment Spray
Pumps P-54A, P-54B, and P-54C as well as Containment Air Cooler Recirculation
Fans V-4B, V-4C, and V-4D remain available.

Your staff indicated that no other safety-related
equipment that could change the conclusion of the risk assessment was
inoperable. As for compensatory measures, during the time that Containment
Air Cooler Recirculation Fan V-4A was inoperable, your staff committed
to the following:

No additional equipment associated with
the containment cooling systems shall be removed from service or worked
on for the duration of the V-4A inoperability. This includes the remaining
equipment on the affected (left) train of containment cooling, as well
as the equipment on the redundant (right) train of containment cooling
as described in Technical Specification Bases 3.6.6. This includes the
following equipment: Diesel Generators 1-1 and 1-2; Containment Spray
Pumps P-54A, P-54B, and P-54C; and Containment Air Cooler Recirculation
Fans V-1A, V-2A, and V-3A.

The above listed equipment associated
with the containment cooling systems shall be protected outside of containment,
with physical barriers and administrative controls, preventing work
on this equipment.

No corrective maintenance, preventative
maintenance, or surveillance testing shall be performed on the above
listed equipment, or the attendant support equipment required by the
Technical Specification definition of "Operable - Operability," for
the duration of the V-4A inoperability.

The physical barriers referenced in Item
2 above shall be verified shiftly for the duration of the V-4A inoperability
and logged in the Operations Log.

No work shall be allowed that could potentially
jeopardize stable plant operation, including no work on Turbine Stop
Valve #2 (which is limiting plant power output) for the duration of
the V-4A inoperability.

The Plant Operations Crew shall be briefed
on these compensatory measures.

If an equipment failure occurs that could
affect the containment cooling function, the Operations Superintendent
shall be contacted and will convene a Plant Review Committee meeting
to evaluate plant status, determine if the basis for the NRC approval
of the enforcement discretion relative to Technical Specification 3.6.6
is affected, and determine the need to notify the NRC.

The Resident Inspector staff verified that
these compensatory measures were properly implemented while this NOED
was in effect.

Although the NRC does not have a plant specific
shutdown risk analysis, we did perform a qualitative evaluation of this
issue. The NRC determined that the risk of continued operation with your
compensatory measures for the additional 100 hour period of the NOED did
not result in an increased risk over shutting down the unit with
Containment Air Cooler Recirculation Fan V-4A inoperable. Based on this
qualitative evaluation, the NRC accepted your safety rationale.

The NRC reviewed your written request for
enforcement discretion dated July 8, 2003, and verified consistency between
your oral and written requests. The NRC's basis for this discretion considered:
(1) the compensatory measures to reduce the probability of a plant transient
while ensuring the availability of other safety-related equipment; and
(2) the qualitative risk evaluation of the condition determined that the
risk of continued operation with compensatory measures for an additional
100 hours did not result in an increased risk over shutting down the unit
with Containment Air Cooler Recirculation Fan V-4A inoperable.

Based on the above considerations, the NRC
staff concluded that Criterion B.2.1.1.a and the applicable criteria in
Section C.4 to NRC Manual Chapter 9900, "Technical Guidance, Operations
- Notices of Enforcement Discretion," were met. Criterion B.2.1.1.a states
that for an operating plant, the NOED is intended to avoid unnecessary
transients as a result of compliance with the license condition and, thus,
minimize potential safety consequences and operational risks.

On the basis of the NRC staff's evaluation
of your request, we concluded that issuance of this NOED is consistent
with the Enforcement Policy and staff guidance, and had no adverse impact
on public health and safety. Therefore, we exercised discretion at 1:37
p.m. on July 3, 2003, not to enforce compliance with TS 3.6.6, Condition
A, for entry into Mode 3 by 10:14 a.m. on July 4, 2002, until 2:14
p.m. on July 8, 2003.

As stated in the Enforcement Policy, action
may be taken, to the extent that violations were involved, for the root
cause that led to the noncompliance for which this NOED was necessary.